This week, Robert Dietz, the chief economist and senior vice president of economics and housing policy at the National Association of Home Builders, joins the Housing News Podcast to discuss how the nation’s homebuilders have fared during the COVID-19 pandemic.
In this episode, Dietz discusses how a national shortage of housing inventory and rising lumber prices have contributed to an increase in construction costs, which is making it much more difficult for builders to introduce affordable housing supply to the market.
During the interview, Dietz also explains where America’s housing inventory currently stands when compared to historical home-building trends.
According to him, the housing market is experiencing a housing deficit of about a million homes, which includes the combination of both apartments and single-family homes.
“While estimates may vary, most economists agree there is a housing deficit. Freddie Mac had an estimate of about two and a half million homes as a shortage, and you can see the critical impacts of that shortage,” Dietz said. “One of these impacts is that home prices are rising faster than incomes during the post-Great Recession period, and that, of course, has led to declines in housing affordability.”
“It has also impacted demographics as we now have more young adults living with their parents,” Dietz said. “In fact, using 2018 data, we found that we’ve gone from about one out of ten young adults living with their parents to one in five. This rate has doubled just over the last couple of decades.”
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Dietz said, currently, the housing market is not making enough homes to support demand.
“If you take a look at this year’s data, we expect to build a little under 900,000 single-family homes and based on demographics, we probably need to build about 1.1 to 1.2 million,” Dietz said. “This number is necessary for population growth, building second homes, and building homes that are removed from the stock due to fires or disaster or just age. Until these homes are created, the deficit continues.”
The Housing News Podcast is a weekly wrap of the top news stories by HousingWire Editor in Chief Sarah Wheeler. Each week, HousingWire interviews financial services experts who can help make sense of the latest headlines, sponsored by our partners at Freddie Mac.
Credit: www.housingwire.com
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